Weathering the Storm

Direct response marketers and their service providers work through the effects of the global recession

Economic times are tough, but the Direct Response TV (DRTV) industry appears to be weathering the storm well, despite the fact that retailers and manufacturers alike are suffering under the effects of the recession. Maybe it's because when times get tight, consumers start comparison shopping. Free premiums and discounts become even more important than ever, and DRTV offers are famous for such deals.

Backchannelmedia.com: May 4, 2009
Timothy R. Hawthorne

Economic times are tough, but the Direct Response TV (DRTV) industry appears to be weathering the storm well, despite the fact that retailers and manufacturers alike are suffering under the effects of the recession. Maybe it's because when times get tight, consumers start comparison shopping. Free premiums and discounts become even more important than ever, and DRTV offers are famous for such deals.

They're also famous for solving problems something that pretty much everyone wants (and needs) to do when money gets tight, job losses loom and credit markets contract. So while general advertising suffers in recessionary times because it's tough to position luxury items as staples, DRTV routinely places products as solutions to everyday problems.

For marketers who just a few years ago were hard-pressed to find affordable media at any time of the day, the opportunities to do so now abound. For the cost of 30 seconds in prime time, companies can fund dozens of airings across a broad range of TV stations and cable networks.

"Certainly the media environment is more open and negotiable right now," says Robin Behar, partner with In Clover Marketing LLC (www.inclovermarketing.com) in Agoura Hills, Calif. "We've heard agencies report that a lot of general short-form commercial spending has left broadcast and shifted into cable. That obviously makes for some great DR availability at excellent rates in the broadcast/network environment that would not necessarily be there without the recession in play."

The Web has also turned into an ace in the hole for DRTV marketers looking to extend their campaigns' reach during the recession. "We've noticed a shift to online purchases, and in some cases marketers are driving to Web-based ordering only and seeing profitability increase by two to three times," says Behar, who sees that shift as an indication that customers feel more comfortable on the Web, and also want to know more about the product before they actually purchase."

"They're doing a little more due diligence then they might have before the recession," says Behar. "This trend will likely continue and grow exponentially, especially for products that target younger demographics."

Like general advertising, the DRTV sector has felt its share of negative impacts from the recession. Backend/upsell conversions that take place during the ordering process, for example, are harder to close. "Customers are responding well to certain offers and want the main unit," says Behar, "but when they have the option of adding additional upsells and/or continuity offers, they're just not as responsive as they were before the recession hit."

Those same customers aren't shelling out as much money at the retail level, which was once thought of as the "holy grail" for DRTV marketers looking to extend the lives of their campaigns. "Customers going to the stores right now have purpose: to get the item that they want or need," Behar explains. "They're watching their pocketbooks, and no longer throwing the 'extras' into their shopping baskets."

Higher price-point products, for example, are suffering more than lower price point items. "This makes sense because customers are giving more consideration to higher-ticket items than they were before the recession," says Behar, who adds that average order prices are certainly less than they once were overall. The good news, she says, is that there's been a recent explosion of low-priced items using short-form DRTV to offer customers a feeling of safety, comfort and quick, noticeable results.

"Companies like Allstar Marketing have seen multiple DRTV successes this year, even in the face of a difficult economy," says Behar. "That says something for companies that are listening to customers about what they really want, and that have the talent pool to navigate and secure the best opportunities in media and/or other backend services."

At Moulton Logistics (www.moultonlogistics.net) in Van Nuys, Calif., vice president of marketing Patrick Moulton, says his firm's DRTV clients have felt little if any negative effects of the economic downturn, which he calls "the perfect storm" for marketers.

"DRTV marketers can afford more ads due to lower ad costs," says Moulton. "Additionally, the reduction in consumer disposable income creates a situation where shoppers stay home, watch more TV and are persuaded to purchase DRTV products, which are usually designed to save the buyer money."

By combining the success of the usual DRTV suspects, and the interest of major brands that have been using traditional marketing and are now seriously considering or moving to the DR arena, and Moulton says his firm has posted strong growth through the recession. Credit the fact that the fulfillment house has made significant investment in warehouses, material handling equipment and staff over the years with helping to buoy its continued growth. "Marketers want to avoid those kind of investments," says Moulton, "and that's the major reason why outsourcing a DRTV campaign's backend continues to grow in popularity."

Expect the DRTV industry to continue bucking the economic trend, says Behar, who sees low-priced items doing exceptionally well through the rest of 2009. The standard, long-form categories of fitness, health/beauty, money saving offers and general innovation will also succeed, says Behar, as will those companies that commit to improving their customer service functions. "

"American consumers are going to be more demanding about the care they receive from DR companies, particularly in regards to return policies and customer care," says Behar. "The dollar means a lot more these days to the average consumer than it did pre-recession."